Robert
C. Forman's ("Forman") and Katelyn
Townsend's ("Townsend") cars collided. The
accident was all Townsend's fault - there is no question
about that, she admits it. Because of Townsend's
negligence, Forman's car, a leased Subaru Impreza, was
totaled. Townsend paid Subaru for this loss. In turn, Subaru
released Forman from the lease. Forman says that making
Subaru whole, is not enough; he too suffered.

He says
that Townsend's negligence caused him to suffer the loss
of his transactional costs to lease the car - $1, 566.90.
Townsend refused to compensate him. Forman then commenced
this action. Compensation for transactional cost involving
the purchase (or lease) of a car raises a novel issue.
Neither party provided authority on this issue and the
court's research failed to identify a case that decides
this point of law.

At
trial, the evidence established the following facts. Forman
leased a Subaru Impreza. The value of the car, new, was $22,
460.70. It was anticipated that the lease would run three
years. At the end of the lease the car would have a residual
value of $13, 869.13. Forman agreed to pay monthly
installments of $255 for 36 months or $9, 180 (which
represented the difference between the value of the car new
and its value at the end of the lease plus a "rent
charge" of $588.00). In addition, Forman paid his first
monthly payment of $255 together with transactional costs of
$1, 566.90 at the lease's signing. Here are how the
transactional costs break down: $162.50 (New York
registration, inspection and tire waste fees); $670
(dealership fees); and $734.40 in sales tax. [1] He leased the
car at the end of December 2016 and the accident occurred in
June 2017.

To
begin with, Townsend does not dispute that Forman is entitled
to receive the full benefit of the bargain he made with
Subaru. Including the initial payment at the signing of the
lease, Forman made six payments which totaled $1, 530. The
extremely detailed market valuation report (exhibit A)
indicates that the Subaru lost $1, 615 of value due to
mileage. Thus, Townsend argues that Forman got what he paid
for.

However,
implicit in this argument is that Forman is not entitled to
transactional costs because the market value of cars does not
reflect the transaction cost incurred by the purchaser.
Transactional costs are considered sunk cost. Basic
microeconomic theory holds that only prospective costs are
relevant to an investment decision. In other words, the value
of a car does not increase because the original purchaser had
paid a high transaction cost to acquire the vehicle.
Conversely, the value of a car does not diminish because the
original purchaser incurred a low transaction cost for its
acquisition. The value of the Subaru is independent of the
transactional costs to secure the lease.

Since
Forman got the benefit of the bargain and since the market
discounts his transactional costs to zero, Townsend questions
why she should pay more than the fair market value of the
property she damaged - a very fair question. Townsend's
position has some force. If this were a contract case, then
Forman would have no claim for additional damages. Contract
damages require an economically driven calculus; i.e.,
measuring the market value of goods and services. But this is
not a contract case, it is a tort case. Tort damages involve
a morally driven analysis. Parties in a tort case (like this
one) are labeled as wrongdoers and victims, not morally
innocuous terms like promisor and promisee. Thus, while a
promisor has to pay the value of a promise not kept, a
wrongdoer has to make her victim whole.

Consequently
"[i]n a tort case, compensatory damages, whether general
or special, serve to make good, so far as it is possible to
do so in dollars and cents, the harm done by a
wrongdoer" (Lopez v. Adams, 69 A.D.3d 1162,
1167-68 [2010] [internal quotation marks and citations
omitted]). As the Supreme Court has noted, "tort damages
generally compensate the plaintiff for loss and return him to
the position he occupied before the injury" (E. Riv.
S.S. Corp. v Transamerica Delaval, Inc., 476 U.S. 858');">476 U.S. 858
[1986]). Thus, "the fundamental purpose of damages, is
to have the wrongdoer make the victim whole"
(Sharapata v. Town of Islip, 56 N.Y.2d 332, 335
[1982] [internal quotation marks and citations omitted]).

Since
placing the injured party in the same position as he would
have been in if the tort had not occurred is the goal, the
injury must be viewed from the eyes of the plaintiff. While a
consumer of a used car is indifferent to the initial
transactional or sunk costs incurred by the original buyer,
the original buyer is not. Thus, the vantage point of what a
reasonable consumer would pay for the car (the point of view
in a contract case) misses the mark in a tort case. Rather,
the appropriate inquiry in tort cases is what the plaintiff
would have paid for a leased car if he knew he would become a
victim of a negligence act before the expiration of the
lease. By this measure, Forman will be made whole.

In this
case, that translates to compensation in an amount sufficient
so that Forman would still have engaged in the lease
agreement knowing that the lease would last only six months.
Damages based upon this theory means that Forman should be
awarded the value of using the car (which he has already
received) plus those transaction costs that he would have
paid for a six-month lease agreement (the period for which he
had the car). There are three components to Forman's
transaction costs: (1) State sales tax; (2) State use fees
(the registration, inspection and tire disposal); and (3) the
dealership fees.

Starting
with the sales tax component. New York taxed Forman based
upon the value of a 36-month lease; his lease lasted but six
months. Forman would not have agreed to pay taxes based on
the value received for a 36-month lease when he was only
going to have a six-month lease. It would be irrational.
Forman has paid New York State too much in sales tax.
However, if Townsend compensated Forman for the excess tax,
then New York would retain the excess and receive an
unjustified windfall. This is unacceptable. Forman's
remedy for over taxation lies with the State and not
Townsend.

The
usage fees component is not recoverable. Fees like
registration and inspection are independent of the number of
miles a car is driven. That is, such fees are required to
drive a car one mile or 100, 000 miles. Forman, to drive the
Subaru, would have paid and would have been required to pay
the State its fees for a six-month lease or a ...

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